Using
the 10 Day Moving Average of the VIX(Volatility Index)
to time a Reversal in the the S&P 500

Using the 10 Day Moving Average of the
VIX (Volatility Index) to time a Reversal in the the S&P
500

Investors can get an idea of when the market may reverse
when the 10 Day Moving Average (MA) of the Volatility Index
(VIX) becomes significantly stretched away from its 10 Day
Moving Average (MA). A simple example is shown below which
compares the 10 Day MA of the VIX to the S&P 500.

Notice when the VIX got stretched significantly away from
its 10 Day MA (blue line) to the upside (points A) that the
S&P 500 made a bottom (points B) and then reversed to
the upside.

Thus keeping track of where the Volatility Index is in relation
to its 10 Day Moving Average can give investors a clue to
when the market may be getting close to a near term bottom
and possible upside reversal.

Information, charts or examples contained in this lesson are for illustration and educational purposes only. It should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice. For further information please read our disclaimer.